JULIA BOORSTIN, NBC NEWS: Big news here. Sony announcing in a statement to NBC News that they are no longer planning to release the movie "The Interview" on December 25th.

MELBER: Sony just paid the ransom. The hackers have won. And now the question: does free speech stop at the water`s edge?

Then, a breakthrough 53 years in the making.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today, the United States of America is changing its relationship with the people of Cuba.

MELBER: The U.S. will normalize relations with Cuba.

OBAMA: I do not believe we can keep doing the same thing for over five decades and expect a different result.

MELBER: Tonight, the story of today`s historic announcement and the political firestorm it`s causing.

SEN. MARCO RUBIO (R), FLORIDA: I would also ask His Holiness to take up the cause of freedom and democracy.

MELBER: Plus, a major victory for the anti-fracking movement in New York.

And Attorney General Holder talks to MSNBC about race and policing on his watch.

ERIC HOLDER, ATTORNEY GENERAL: It means we as a nation have failed. It`s as simple as that. We have failed.

MELBER: ALL IN starts right now.

(END VIDEOTAPE)

MELBER: Good evening from New York. I`m Ari Melber.

Breaking news tonight: the precedent hack against Sony Pictures worked. After hackers stole data and made explicit threats of violence over a movie they didn`t like because of its treatment of North Korea, tonight they know they got exactly what they wanted. Sony announced it is paying the ransom. As the work day ended here on the East Coast, Sony made it official, announcing it is canceling the theatrical release of that controversial movie, "The Interview", the comedy imagines a plot to assassinate real life North Korean leader Kim Jong-un, and it has certainly escalated tensions between that country and the U.S.

Sony`s statement is something else. Here`s what it says, "Sony Pictures has been the victim of an unprecedented criminal assault against our employees, our customers and our business. Those who attacked us stole our intellectual property, private e-mails and sensitive and proprietary material and sought to destroy our spirit and our morale, all apparently to thwart the release of a movie they did not like. We are deeply saddened at this brazen effort to suppress the distribution of a movie, and in the process do damage to our company, our employees and the American public."

"We stand by our filmmakers," Sony continues, "and their right to free expression and are extremely disappointed by this outcome."

Now, because of this subject matter of "The Interview," there has been widespread speculation this whole time that North Korea was explicitly responsible for this hack. Now, the country did say that the film was, quote, "an act of war" back in the summer, but they denied their involvement in the hack.

And that brings me to the other piece of breaking news here -- of U.S. officials telling NBC News tonight for first time they believe North Korea, its government, is behind all this. Though they also stress the operational attack originated outside of North Korea. Quote, "We have found linkage to the North Korean government", that`s according to one U.S. official.

Now, Sony`s unprecedented decision to pull the movie came after most of the nation`s major theater chains decided to delay or drop the film from their theaters.

Now, Sony cited that fact in its statement. I want to read that as well to you. They said, quote, "We respect and understand our partners` decision and, of course, completely share their paramount interest in the safety of employees and theater-goers."

The group behind the Sony hack which calls itself Guardians of Peace had yesterday released a threat of explicit violence against theaters that did plan to show "The Interview" and included a reference to the 9/11 attacks. "Whatever comes in the coming days," they said, "is called by the greed of Sony Pictures Entertainment. All the world will denounce the Sony", end quote.

Now that it`s pulled "The Interview" from theaters, Sony faces the decision about what to do about all this in the film. Many are calling on the company to at least release the movie online, arguing that doing that will make it clear that those behind the hacks and the threats they can`t force complete censorship of this film.

Quite a story unfolding here. Joining me is Brent Lang, a senior film and media reporter for "Variety" magazine, and has been all over this.

Let`s start with the fact that this is a difficult decision that Sony had to make. We understand that. But you look at that statement here breaking tonight, them saying this is free speech, this is bad, and yet by paying the ransom by giving in, they know that they`ve made this more likely to be a consequence and an attack in the future.

BRENT LANG, VARIETY MAGAZINE: Well, it`s not exactly a Hollywood ending. The bad guys certainly seem to have won in this case.

And if you read that statement, you can see that Sony is playing to a lot of different constituencies. They`re clearly trying to blame the exhibitors at some level, that the exhibitors have made this decision, that it was their decision to pull the film. They really didn`t have any choice.

And at the same time they`re standing up for free speech, free expression, things that are very popular with artists and stars, and celebrity people --

MELBER: Are they standing up for free expression?

LANG: Well, that`s debatable. But in this case, they`re trying to make some sort of larger statement about speech being quelled. Obviously, playing to members of the Hollywood community for whom that kind of artistic expression is extremely important.

MELBER: How much is this costing Sony now?

LANG: Well, it`s costly in a number of different ways. In terms of the film itself, it`s a film that had a budget of between $42 million and $43 million. In terms of marketing and promotional costs, you know, you`re looking at $30 million to $50 million in marketing and promotion cost. All of that goes out the window.

Now, Sony trying to kill its advertising -- its television advertising right now and at least recoup some of that money, but extremely costly. And that`s to say nothing of the tens of millions of dollars in repairing their cyber network, their computer network and any kind of legal liability the company faced. So, a very, very costly experience.

MELBER: From your reporting in Hollywood, is this seen as a Sony problem and a Sony story, or a story about a particular movie that was aberrant, that was weird, that went really far in a storyline about assassinating a current leader? Or is this a bigger story now, are people feeling scared across the industry?

LANG: Well, I think in this case, the silence was deafening. If you look at it, very, very few A-list directors, big studio executives came out and went to bat for Sony.

MELBER: Why?

LANG: And a lot of it was fear.

MELBER: Fear.

LANG: I think they were worried about repercussions and any kind of potential punishment they might face if they went too far in support of Sony.

MELBER: So, this kind of criminal hack -- and we`re going to talk more about where it originated because this is a foreign policy story as much as an artistic and Hollywood story, but this kind of foreign hack you think made even these very powerful people who are rich, who have platforms, who have lawyers, this is not just average people, although average employees of Sony were affected, as we`ve been reporting. But you think it made these powerful people afraid enough to just shut up.

LANG: Well, it was totally unprecedented. I mean, Hollywood has never seen something of this level. I can`t think of another film that`s been pulled in this way at this late of date for this kind of reason.

MELBER: And so, what happens when people wake up tomorrow in L.A.? Do people move on from this or is there a greater reckoning here as people try to figure out what are the new rules of the road? And what are the reactions going to be from -- we get criticized for our export of culture in Hollywood in many countries, including the Middle East where we have a lot of interests and a lot of critics. Do there have to be new rules of the road? Does Chris Dodd, the former senator who runs the MPAA, does he have to get involved here and figure out whether there is a line that folks don`t want to cross?

LANG: But where was the MPAA? I mean, when you look at it, Chris Dodd, a politician, where was the MPAA? They did a couple of watered-down statements. They did not really come out on board. They tried to get all the studios together to try to do some kind of statement of solidarity and they apparently failed in that effort.

MELBER: Yes, I will mention, since we invoked his name, we`ve invited Chris Dodd to come on and that invitation stands.

I want to thank you very much for your time tonight.

I want to turn, Brent Lang, to another piece of this. Many people can understand why those individual theaters we were talking about, why they would choose to take a different movie, really any movie, instead of "The Interview" after specific threats of violence against their theater. And Sony cited that collective exodus in its decision to pull the release today.

But we want to look at this -- even if those individual decisions do make sense for security, for business, for risk aversion, tonight`s victory for the criminals who sought to censor this film would seem to have much far-reaching consequences, and that`s not even a prediction.

Let me tell you this, already reports out now about a planned movie that was set in North Korea starring Steve Carell, canceled. Many in Hollywood all respond with Sony`s decision with sadness, with outrage and disbelief.

In a statement to ALL IN tonight, screenwriter Aaron Sorkin who argued this week that the press had fed part of the damage of this Sony hack -- well, he e-mailed me and he said, "Today, the U.S. succumbed to an unprecedented attack on our most cherish bedrock principle of free speech." He continues, "The wishes of the terrorists were fulfilled in part by easily distracted members of the American press who chose gossip and schadenfreude-fueled reporting over a story with immeasurable consequence for the American public, a story that was developing right in front of their eyes."

Meanwhile, filmmaker Judd Apatow asked if theaters will now pull any movie that gets an anonymous threat.

Carell tweeted simply, "Sad day for creative expression."

Indeed, given the victory here for North Korea, or its interests, many American artists can rightly ask whether they`re safer criticizing their own government than our enemies.

Joining me now, David Edelstein, chief film critic for "New York Magazine" and a commentator at "CBS Sunday Morning".

I put that question -- good evening to you. But not a good evening for freedom of speech.

I put that question to you: are you safer criticizing the U.S. government here than these foreign regimes?

DAVID EDELSTEIN, CHIEF FILM CRITIC, NEW YORK MAGAZINE: Well, Ari, let me say -- is this the camera? I just want to make sure you understand that I believe Kim Jong-un is a great and wise leader, and my presence here is in no way intended as a criticism of him. I believe he was sent from god to be an emissary and to lead his people.

MELBER: And you feel safe now? You feel safer.

EDELSTEIN: I feel very, very safe. And having established that, I did really love it in "Team America: World Police" where Kim Jong-il, his father got his head blown off by the team America. It was a really funny moment, but those were different times.

MELBER: Well, people like that movie. Would anyone put that movie out today?

EDELSTEIN: No, absolutely not. But, you know, who knows? Because the "South Park" guys love to provoke these people, you know? They did it with -- do you remember where "Bigger, Louder, Uncut" the "South Park" movie where they had Saddam Hussein the gay lover of Satan, OK?

There is a great and rich tradition of political satire specifically aimed at totalitarian governments that we know do not have any sense of humor whatsoever. And that is one of the things that we export. Satire is something that, in particular this country, I think, France, the U.K., has a very rich and wonderful history beginning with "Duck Soup" by the Marks Brothers and various anti-Hitler movies that came out in the late `30s and early `40s.

So, this is a creative tragedy. This is terrible that people are going to have to watch themselves now.

Now, if North Korea -- if this is indeed North Korea and they did are the means back when "South Park" -- when "Team America: World Police" came out, if they did have the means, they probably would have done it, we now know. But they didn`t have the means.

Now, they seem to have enlisted probably people from China. You know, we don`t know.

MELBER: But we don`t know that. NBC News reporting linkage in the operational aspect and that it was outside North Korea. Beyond that, we just haven`t confirmed it.

But this was a foreign policy attack, right? This is a cyber attack. It`s valuable information. Some of it goes in the public domain and reporters can use it.

But the deep question here for these companies is do they now draw a wider line -- you know, in the law, we always talk about a chilling effect. If you`re afraid, you don`t even go near the line.

(CROSSTALK)

MELBER: Let me finish the question.

EDELSTEIN: Yes, yes.

MELBER: Do we have a situation now in Hollywood -- and you talk to these folks and you cover this -- where folks are going to say, we don`t want to criticize Iran, we don`t want to criticize Syria? You know, we`re talking about Cuba later in the hour with a breakthrough now, but we`re afraid of Cuba. Is that where we`re headed even though we think we`re making progress here as a modern nation?

EDELSTEIN: Look, I`m a critic. I`m not an industry reporter. But I can tell you that as a critic, I`ve been very depressed over the last few years as, for example, the Asian market has become more and more important to Hollywood`s bottom line. Now, you`re talking about 70 percent to 80 percent.

"The Interview" had already been canceled in Asia. You know, that`s a huge market where they already said, we`re not releasing it in Asia. So, all you`re talking about is U.S. domestic distribution at this point, which was going to be a fraction of their returns in any case.

They were already running scared. They already do not want to offend leaders in the major markets that they go into. And I think this is going to be the wave of the future.

Already these people -- these people, I shouldn`t say that. Already other countries are dictating the content of our films.

Now, the smaller films, you know, the independent films from places like Iran, from places like, you know, Middle East countries and Asian countries, they`re still going to come over here, they`re going to trickle over here.

MELBER: Briefly, though, Brent said this was about fear. Do you think it was more about money or fear?

EDELSTEIN: No, I think it was about money. Obviously, look, they don`t want people to be killed over a movie that we know ironically from the Sony ads that Amy Pascal, that people at Sony thought this was a piece of crap.

MELBER: I think that almost -- this is so important, I think that almost skips the question, right? People can be killed in this country because we protect religious freedom. People can be killed because we have brave soldiers who go out and do our foreign policy.

The notion that the new veto is going to be anonymous Internet threats, that cannot stand. I mean, I think we`re just at the beginning of it. But it`s interesting because Brent was talking about fear, you`re talking about the commercial aspect -- both very relevant.

MELBER: Should African-American and Latino young people be afraid of the police in this country? That`s what my colleague Joy Reid asked Attorney General Eric Holder. His answer is up ahead.

(COMMERCIAL BREAK)

MELBER: It is the biggest shift in U.S. policy towards Cuba in half a century. In coordinated broadcasts airing simultaneously today, President Obama and Cuban President Raul Castro announced new steps to re-establish diplomatic relations and end decades of hostility between these two nations.

(BEGIN VIDEO CLIP)

OBAMA: We will end an outdated approach that for decades has failed to advance our interests and instead we will begin to normalize relations between our two countries. Through these changes, we intend to create more opportunities for the American and Cuban people and begin a new chapter among the nations of the Americas.

I do not expect the changes I`m announcing today to bring about a transformation of Cuban society overnight. But I am convinced that to a policy of engagement, we can more effectively stand up for our values and help the Cuban people help themselves as they move into the 21st century.

(END VIDEO CLIP)

MELBER: Under this breakthrough new agreement, the United States will open an embassy in Havana and ease restrictions on banking, on remittance, on travel between these two countries, although the full U.S. embargo cannot be legally lifted without a formal act of Congress. The State Department will also start the process of removing Cuba from that official list of state sponsors of terror.

Now, as part of the deal, U.S. government exchanged three Cuban spies that were convicted and imprisoned here for a prisoner held in Cuba for the past 20 years, a Cuban national who was an intelligence agent for the U.S. The Castro government also agreed to release Alan Gross, an American government contractor working in Cuba, who was convicted there, they said, the Cubans, of espionage back in 2009.

After serving five years in a Cuban prison, separated from his family and in poor health, Gross returned to American soil this morning. He was escorted to the U.S. by a group of lawmakers, you can see them there with Maryland Congressman Chris Van Hollen, Arizona Republican Senator Jeff Flake and Senator Leahy of Vermont.

Now, Gross later gave a press conference accompanied by his wife of 44 years, Judy.

(BEGIN VIDEO CLIP)

ALAN GROSS: What a blessing it is to be a citizen of this country and thank you, Mr. President Mr. President, for everything that you have done. To me, Cubanos, or at least most of them are incredibly kind, generous and talented. It pains me to see them treated so unjustly as a consequence of two governments` mutually belligerent policies. Five and a half decades of history show us that such belligerence inhibits better judgment. Two wrongs never make a right.

(END VIDEO CLIP)

MELBER: Those 5 1/2 decades end today with a historic deal that came after a 45-minute call recently between President Obama and Castro following nearly a year of secret talks between the American and Cuban representatives that occurred in Canada. After intervention by, wow, yes, the pope himself who we can now report hosted a key meeting about this at the Vatican in the fall.

And while the prospect of diplomatic relations with the Castro regime remains controversial, many Cuban Americans are welcoming this breakthrough.

(BEGIN VIDEO CLIP)

SEBASTIAN PARIS, CUBAN AMERICAN: The embargo and not having negotiations with Cuba have only hurt the Cuban people, unfortunately. This is absolutely great. I am ecstatic. I have called everyone on my contacts. This is the best news that I have heard in my entire life.

(END VIDEO CLIP)

MELBER: That`s one heartfelt opinion there, but that opinion not shared by some of the Cuban Americans that serve in Congress, including Democratic Senator Bob Menendez of New Jersey and Republican Ted Cruz of Texas and Florida Senator Marco Rubio.

The Republican strongly contends the administration`s shift in policy.

(BEGIN VIDEO CLIP)

RUBIO: This president is the single-worst negotiator we`ve had in the White House in my lifetime, who has basically given the Cuban government everything it asked for, and received no assurances of any advances in democracy and freedom in return.

MELBER: We`re just looking at that picture of you guys all together on a historic day, a bipartisan gathering. Walk us through what you did, what led up to this.

VAN HOLLEN: Well, it was a great day. You know, for the last five years that Alan Gross was in prison, lots of people have been working hard to secure his release, none more so than his wife Judy. And there have been lots of ups and downs over those five years, but over the last couple weeks, it appeared that an agreement was beginning to gel. Monday night, I got the call that it had come together and was asked to escort -- be part of the group that escorted Alan home.

And so, when we walked into the airport in Havana and saw Alan Gross, he`s very frail and very skinny, but he had the biggest smile and I think it was his first sort of recognition that the day had finally come that he`s going home.

MELBER: That`s one American that this is a great outcome for, a great story for those of us who have been following it all day.

What about the rest of the country? People take it as a given, I think, that you can`t go to Cuba, that this is a zero tolerance policy. And Americans have heard, I should mention, from presidents in both parties for decades that this is how it has to be, that this is a national security matter.

What changed and what about it would be good for regular Americans?

VAN HOLLEN: Well, Ari, I think after 54 years of unsuccessful efforts to try and change the Cuban regime, to try to bring about more freedoms by a policy of punishment and isolation, the president rightly decided that the way to go was to try engagement with the Cuban people. After all, the isolation approach has only sustained the Castro Brothers regime. They`ve survived more than eight American presidents.

MELBER: Right.

VAN HOLLEN: So, this approach says more contact with the Cuban people, more travel, more trade, more communication will actually help build pressure to change the direction in Cuba.

MELBER: In your view, Congressman, was it more important that the change in Cuba shifted away from Fidel Castro or the change in the United States to a president who did campaign on this kind of diplomacy?

VAN HOLLEN: Well, I think the president was right to argue that after 54 years you could conclude that finally something`s not working.

I mean, the critics of the president have to explain why another five to 10 years of this policy would produce a different result than the past 54. And so, the president recognized that if we really want to help empower the Cuban people, as opposed to empower the Cuban regime, we need to fully engage.

And that`s what he did today. And I think, you know, the Cuban government obviously was willing to take some of these steps, but I think they`re taking a big risk in the sense that more engagement and more freedom I think will increase the pressures within Cuba for change.

I don`t expect the change from the top. But I believe a policy of engagement can help bring about change from the bottom.

MELBER: Well, it`s a remarkable historic day for the United States. I know it`s been a long day for you specifically Congressman Van Hollen. Thanks for joining us.

VAN HOLLEN: Thanks, Ari. Thanks for having me.

And now we go right to Havana where NBC News correspondent Mark Potter joins us.

What is the reception there?

MARK POTTER, NBC NEWS CORRESPONDENT: Hi, Ari.

Well, people are -- a lot of people are just learning about it now. This is the hour of the national news broadcast here in Havana. Some people saw Raul Castro at noon. Word has spread throughout the island.

People are processing this. There`s not a big groundswell, people taking to the streets, pounding pots and pans. But I think it`s safe to say that people are very engaged by this. They think this is good news.

For years and years we have been hearing people here in Cuba say they would like to see relations with the United States improve. They think that they would improve their lives. Most people in this country, certainly more than half, have lived under nothing but tense relations between their government and the U.S. government, and they`d like to see that change.

So, there is hope here particularly among the young people that this new opening, these new diplomatic relationships will lead to better economic openings and some political openings.

MELBER: Sure. And, Mark --

POTTER: They think this is -- they`re looking at this positively.

MELBER: How did Raul Castro sell it today there?

POTTER: It was interesting. He was very conciliatory.

While waiting to go through customs here, I had some visa problem, but they were solved. I got a chance to watch his speech.

He was very conciliatory. He was praising President Obama, and he urged the Cuban people to do the same, and to give him a break and to listen to what he had to say. He said there are still core problems, core differences between the Cuban government and the U.S. government over the issue of what they call the blockade here, we call the embargo, over the issue of human rights. But he said there`s a new format for discussing it.

And so, that`s how he sold it. A very, very conciliatory Raul Castro in a format we`ve not seen him in talking to the nation at noon at the same time the U.S. president was talking -- a very rare and newsworthy event here.

MELBER: Yes, that`s one thing that a lot of people in both countries would find surprising, seeing their leaders explain and defend this.

Mark Potter, thanks for your reporting.

Now, what does what happened with Cuba today mean for all the people who want to do, they say, a better job than President Obama? We`ll talk about that straight ahead.

(COMMERCIAL BREAK)

MELBER: The policy details of today`s Cuban deal are pretty complicated but the domestic politics are very simple. As Tim Russert once said it comes down to Florida, Florida, Florida. 70 percent of all Cuban-Americans lived in Florida in 2011, according to Pew, and because so many came here as exiles originally, fleeing the Castro regime, once upon a time they generally supported a hard line on Cuba, that`s bee a key part of GOP success in Florida.

George W. Bush won 78 percent of the Cuban vote back in 2004. And it`s why you hear so much tough rhetoric on this from GOP presidential candidates like this 2012 debate in the Sunshine state.

(BEGIN VIDEO CLIP)

RICK SANTORUM, FRM. REPUBLICAN PRESIDENTIAL CANDIDATE: This is a serious threat. It`s a threat that I`ve been talking about for about six or seven years and it`s one that`s not going to go away until we confront the threat.

MITT ROMNEY, FRM. REPUBLICAN PRESIDENTIAL CANDIDATE: This president has taken a very dangerous course with regards to Cuba saying we`re going to relax relations, we`re going to open up travel to Cuba. This is the wrong time for that with this kind of heroics going on. We want to stand with the people of Cuba that want freedom.

NEW GINGRICH, FRM. SPEAKER OF THE HOUSE: They don`t have a future as a dictatorship, because a Gingrich presidency will not tolerate four more years of this dictatorship.

SEN. TED CRUZ, (R) TEXAS: You know, this is yet another manifestation of the failures of the Obama, Clinton, Kerry foreign policy. For six years we followed the pattern of alienating and abandoning our friends and allies and at the same time coddling up to and appeasing those who are enemies of this country.

(END VIDEO CLIP)

MELBER: That`s not exactly what appeasing means, but we`ll get to that later.

What I want to get to know is that there is a new generation of Cuban-Americans that have reached the voting age. And the politics around Cuba have completely shifted even in Florida. In 2012, the Cuban-American vote flipped in Florida. For the very first time, President Obama won it at 49 percent. In one poll of Cuban-Americans in Florida`s Miami-Dade County, 68 percent supported re-establishing diplomatic relations, and among those aged 29 and under that number jumped to 88 percent.

Joining me now is Tico Almeida, former counsel to House Democratic leadership on foreign policy with Latin America.

Good evening.

TICO ALMEIDA, FRM. COUNSEL TO HOUSE DEM. LEADERSHIP: Good evening. Great to be here.

MELBER: You`ve been working on these issues a long time. What do you make of this? And how important it is that the politics have changed?

ALMEIDA: Well, I could not be happier with the announcement from the president today. It is something that really is quite emotional for me and for my Cuban-American family because we`ve been waiting decades for an American president to announce a pro-family policy, a policy that allows us to visit our family more often, to send remittances more often. And in this Christmas season, to send Christmas gifts, something that most Americans take that for granted, but frankly for decades has been sort of illegal for us to send gifts down to our families, for Jewish-Cubans to send Hanukkah gifts.

It is an anti-family policy that these Republicans have been sticking to for five decades, pretending that it was going to bring some sort of change and refusing to adjust to reality.

ALMEIDA: I think the Republicans have some bad strategists on this issue. They are still listening to Diaz-Balart. They are still listening to Marco Rubio. They are still listening to that Canadian Ted Cruz. And the problem is that they don`t speak for me. They don`t speak for my Cuban-American family. And they don`t speak for a majority of Cuban-American voters.

MELBER: Let me get your reaction to something, since you mentioned him, that Marco Rubio said today. Speaking of odd strategy, his criticism of the pope on this issue. Take a listen.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO, (R) FLORIDA: My understanding is that the influence that his holiness had was on the release of Mr. Gross, which I`ve not criticized. As I said I`m happy that he`s with the Cuban people.

I would also ask His Holiness to take up the case of freedom and democracy which is critical for a free people for a people to truly be free.

(END VIDEO CLIP)

MELBER: What did you make of that?

ALMEIDA: I am Catholic like most Cuban-Americans. I`m a -- to be honest, I`m a twice a year Catholic, but with this new pope I`m considering going a lot more often because I think he has done a phenomenal job on so many issues including this one, and I`m thrilled with the role that the pope played in bringing forward this deal that is a pro-family deal that will bring people together, that will bring change in Cuba, that promotes democracy, freedom, fairness.

I think to criticize the pope is absurd on this point.

MELBER: You know, Tico, I`m not Catholic and I was almost offended for the pope. It`s weird to say. He doesn`t advance freedom, especially this pope. It was an odd note on a pretty historic day.

Tico Almeida, thank you so much.

ALMEIDA: Thank you.

MELBER: President Obama`s story about how he was once mistaken for a valet and Attorney General Eric Holder`s reaction to all these recent reports of how police are interacting with minority youths. That`s straight ahead.

(COMMERCIAL BREAK)

MELBER: President Obama in a brand new interview with People magazine which reaches more than 40 million readers talks about his experience with racial prejudice, including the time he was mistaken for a valet saying, quote, "there`s no black male my age who is a professional who hasn`t come out of a restaurant and is waiting for their car and somebody didn`t hand their them their car keys."

The new interview comes just one week after the president shared his thoughts on the recent and renewed scrutiny of interactions between minorities and the police and what video evidence has done to validate some long-held concerns from minority communities.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES; The fact is that what we`ve seen now on videotape because it used to be folks would say, well, maybe blacks are exaggerating, maybe it was some of these situations aren`t what they describe, but we`ve now seen on television, for everybody to see.

(END VIDEO CLIP)

MELBER: And now this is new, Attorney General Eric Holder was just asked a similar question about interactions between minorities and the police by MSNBC`s Joy Reid. She sat down with him last week at the National Civil Rights museum on a replica of the bus where Rosa Parks helped advance the civil rights movement. And one of the first things Joy asked the attorney general was if African-American and Latino young people should be afraid of the police.

(BEGIN VIDEO CLIP)

ERIC HOLDER, U.S. ATTORNEY GENERAL: We`re not at a stage yet where I can honestly say, you know, truthfully say, that if you are a person of color you should not be concerned about any interaction that you have with the police in the same way that I can`t say to a police officer, you shouldn`t worry about what community you are being asked to operate in.

And so there is work that our nation has to do. It`s what the president has asked me to do in going around the nation and having these interactions, and it`s what we are as an administration committed to doing, to building trust that does not now exist but that has to exist, it has to exist, has to exist.

JOY REID, MSNBC CORRESPONDENT: Well, I`m struck in listening to you by the words of a deputy attorney general going back to about the year 2000, 2001, in a similar case in New York, Amadou Diallo, a young West African immigrant who was shot in the vestibule of his own apartment. At that time that deputy Attorney General Eric Holder issued a memoranda explaining why there was not going to be a federal prosecution of the officers who were acquitted in that killing.

And at that time you said there was a sense of mistrust between black communities and police that needed to be bridged, trust need to be built up. What does it say that we essentially are in the same exact place now so many years later?

HOLDER: It means that we as a nation have failed. It`s as simple as that, we have failed. We have understood that these issues have existed even long before that 2001 memorandum by that then young deputy attorney general. These are issues that we`ve been dealing with for generations.

And it`s why we need to seize this opportunity we now have. We have a moment in time that we can perhaps come up with some meaningful change. It`s what I`m committed to doing even with the limited time I have left as attorney general and I`ll certainly continue to do it after I leave office.

(END VIDEO CLIP)

MELBER: You can see Joy`s full interview with Attorney General Eric Holder tomorrow on The Reid Report, that`s 2:00 p.m. Eastern here on MSNBC.

Now, the fallout continues from the smoking guns report on that witness 40 in the Ferguson grand jury. And it might not have been seen -- it might not have something you have seen at Michael Brown`s shooting, an attorney for the Brown family will be here ahead.

(COMMERCIAL BREAK)

MELBER: Another story we`ve been watching, a huge victory for environmentalists in New York, which today banned fracking over concerns about health risks. I`m going to talk about this with Josh Fox, director of the Gasland films ahead.

(COMMERCIAL BREAK)

MELBER: For people trying to make sense of this tonight, what are you going to do about it? Is there a filing or an action you`re considering taking?

(BEGIN VIDEO CLIP)

BENJAMIN CRUMP, ATTORNEY FOR MICHAEL BROWN`S FAMILY: Absolutely. We`ve talked to his family about this all day. And we do believe that this should go before a judge, and she should consider setting aside this grand jury`s decision based on the information that was presented by this prosecutor and especially this witness and other things.

(END VIDEO CLIP)

MELBER: That was Brown family attorney Benjamin Crump saying he hopes to have the Ferguson grand jury decision set aside. Now that push comes after new reporting by the Smoking Gun website on witness 40 identifying her as a woman with, quote, "a criminal past who has a history of making racist remarks and once insinuated herself into another high profile St. Louis criminal case with claims that police eventually dismissed as a complete fabrication."

And keep in mind this is the same witness who, by her account, in journal pages that were given to the grand jury wrote she witnessed the shooting of Michael Brown and that in the final moments of his life, quote, "the cop just stood there and dang if that kid didn`t start running right at the cop like a football player head down," end quote.

If you follow this story that quote may be familiar. It made witness 40 a favorite on Fox News, which repeated that quote, like a football player, all the time.

Now the reason witness 40 was brought before the grand jury was because she was brought in of course by St. Louis County prosecutor Bob McCulloch. And his office called her despite this ample evidence we`ve seen that witness 40 may not have actually witnessed Brown`s death at all.

Now we reached out to McCulloch`s office for an explanation, we have not heard back on this one.

Joining me now is Anthony Gray, attorney for the family of Michael Brown.

Good evening to you, sir.

ANTHONY GRAY, MICHAEL BROWN FAMILY ATTORNEY: Good evening, sir.

MELBER: What is the takeaway here beyond the fact that some people may find this completely unfair and suspicious that this person was put before the grand jury, what is the legal takeaway for you?

GRAY: Well, the legal takeaway is that it just gives us the sense that theentire process was fraught with this kind of irrelevant, inconsistent information all uploaded into the minds of the jury, the jury panel, which did not need to hear all this information overload.

You know, what this also tells me is that the narrative about Mike Brown Jr. charging Darren Wilson was out there in the public domain within 24 hours after this incident. And so once that narrative got out there, apparently this witness wanted to latch hold to it and to support Darren Wilson in this incident.

And so that it shows me that as well that this narrative was out there well before Officer Wilson even testified about it because she was repeating verbatim as to what he testified to later in the grand jury. And that`s kind of like the most important takeaway that I get out of it.

MELBER: And when you see the talk of setting aside the grand jury, are you going to try to do that? And what would be your basis for that?

GRAY: Well, we think that, number one, the lawyers ourselves that are on the Mike Brown team do not feel that we would be the best advocates for voiding this grand jury decision. We think that a public interest group would probably serve a greater good and disassociated with the underling cause of action.

We don`t want to seem as though we`re vested in this outcome of it because we think it`s more of a public interest right that`s being pursued as opposed to an individual right for Mike Brown.

MELBER: You`re hoping that an independent group would intercede or make some legal motion that would call into question why the prosecutor might have put someone who was so noncredible or had this history before the grand jury?

GRAY: Exactly.

And we think that that along with the improper legal instructions, along with some other irregularities -- and it`s pretty obvious when you read the grand jury transcripts -- I mean, it`s gut-wrenching just to read and just kind of get a sense that how the prosecutors were advocating for Officer Wilson throughout the process.

You know, you kind of lose your sense of what they were actually there to do when you read the transcripts.

So yeah, we`re hoping that some outside group will take an interest in it and ask Judge McShane to void the grand jury decision, impanel another grand jury and allow for a special prosecutor to present the evidence in the case the second time.

MELBER: Anthony Gray, thank you for being with us tonight.

GRA: No problem. Thank you.

MELBER: And the one time it`s actually a good thing when the politician says he`s not a scientist. That`s next.

(COMMERCIAL BREAK)

MELBER: Today New York Governor Andrew Cuomo announced that the state of New York will ban hydraulic fracturing or fracking. The decision will resonate nationwide not just as a victory for those opposed to fracking, but as a battle won by environmental populists.

But it is ironically the go-to Republican excuse for rejecting the overwhelming scientific consensus on climate change. Well, today Governor Cuomo offered a sort of a mirror version of this approach, but in his case he used the "I`m not a scientist" line as a decision to listen to the scientists and not ignore them.

(BEGIN VIDEO CLIP)

GOV. ANDREW CUOMO, (D) NEW YORK: Is it a great job generator or is it a danger to public health or the environment? And my answer has been I don`t know and it`s not what I do. I am not a scientist. I`m not an environmental expert. I`m not a health expert. All things being equal, I will be bound by what the experts say. Because I am not in a position to second guess them with my expertise.

(END VIDEO CLIP)

MELBER: Joining me now is Josh Fox, director and producer of Gasland and Gasland II. He`s in the Amazon, but wanted to make time for a big development in this battle.

What specifically does today`s news mean for this movement nationwide?

JOSH FOX, DOCUMENTARY FILMMAKER: This is gigantic. There`s no understating -- first of all, I have to do this and put on my Yankees hat.

MELBER: Nice, great.

FOX: Now even in the Peruvian Amazon where I`m at with Amazon Watch doing some reporting on oil spills.

Look, this can`t be underestimated. This is gigantic, this is huge. This has been a seven, eight-year battle in New York State. And it is a huge victory for science exactly what we just -- what your segment just gave us into.

Because listen, when I started investigating fracking in 2008 there was no peer-reviewed science, there were no scientific papers. What we have seen in the last several years is an explosion of peer-reviewed science, one scientific paper coming out now per day. We`re at 400 and counting.

And those scientific papers say 96 percent of them or so say that there is a health risk to fracking. In the 90th percentile say that there is a huge risk for air pollution. 75 -- approximately -- percent of them say that there are risks of water contamination. So all the things that we`ve been reporting on, that the citizens have been reporting on, that this movement which has been driven by people in their own backwards in Colorado, in Texas, in Wyoming, in Pennsylvania, in New York, has been substantiated by the science.

And Governor Cuomo, thank you so much for listening to the science, for heeding the science and for doing something which, frankly, no one expected and we were all settling in for the long haul. But this is precedent setting across the world. This is an enormous moment for anti-fracking movement and all people who are fighting against climate change and fighting the fossil fuel industry and for a noble energy future.

MELBER: And Josh, as you were speaking, we were showing some of the footage including what you might call the anecdotal science of water coming out of the faucet that then is semi-flammable, something you`ve reported on.

Let me play for you as well New York health commissioner Dr. Howard Zucker since you mentioned what do we know and how do we know it. Take a listen to what he said today.

(BEGIN VIDEO CLIP)

DR. HOWARD ZUCKER, NEW YORK HEALTH COMMISSIONER: Until the public health red flags are answered by valid evidence through longitudinal long-term studies, prospective analysis, patient surveys with large population pools showing that the risks for impact on public health are avoidable, or sufficiently low, I cannot support high volume hydraulic fracturing in the great state of New York.

(END VIDEO CLIP)

MELBER: He didn`t go as far as you did. He`s saying we don`t know enough but until we do there`s a safety burden on the industry here to wait and not get in and not get in and not get to do all this stuff until we know it`s safe for our water and for our communities.

FOX: Well, what he`s doing is reversing the burden of proof. The burden of proof should be on the fracking industry to prove that they are safe, but what hasbeen the case over the last ten years in the United States is that the burden of proof has been on the citizens. Citizens can in no way really prove like, you know, we can light our water on fire because of fracking. Well, the industry can prove that. The science can prove that.

And what we`ve seen right now is that that is no longer anecdotal. We know that the industry`s own science shows that methane migration happens at very, very high rates. But it is the citizens and the grass roots themselves -- this is an enormous victory for the grassroots, for New Yorkers against fracking, for the hundreds of anti-fracking organizations in New York, mom and pop organizations that started around kitchen tables, sitting around five people at a time. This is a community meetings.

These are the people who pushed the scientists to go ahead and do these...

MELBER: And Josh, it`s an amazing victory on an issue that you worked a lot on and a victory for doing live TV from an internet cafe in the Amazon. Thank you so much. We`re out of time.

That`s All In for this evening. You can always e-mail me at Ari@MSNBC.com.

The Rachel Maddow show starts now.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

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